ECON-UA 1 Lecture Notes - Lecture 13: Potential Output, Diminishing Returns

• School: New York University
• Department: Economics
• Course: ECON-UA 1
• Professor: Lieberman

Document Summary

Econ ua 1 - lecture 13 - economic growth. Growth in y or yfe (potential output) because in the lr, y=yfe. Why so important: direct importance: standard of gdp: roughly real gdp/population, political: wealth distribution, small growth in growth rate makes big difference, one gets rich, another gets poor. If something grows at z percent per year, it will double in about 70/z years. Total annual output (y) = (total ann. output / total ann. hours) aka productivity ann. hours total ann. employment / population: population total ann. hours / total ann. employment total ann. employment total. Growth equation: total output (y) = productivity, avg hours, employment population ratio, y/population = productivity , % y/population = % productivity (2. 0) + % avg hrs (-0. 2) + % avg hrs . Epr (0: % real output per capita = 2-0. 2 = 1. 8% Limits to using increase in k approach to generate growth.